EX-10.1 2008 Equity Incentive Plan






EXHIBIT 10.1




CONSOLIDATED WATER CO. LTD. 2008 EQUITY INCENTIVE PLAN




1.     Purpose.




     The purpose of the Consolidated Water Co. Ltd. 2008 Equity Incentive Plan (the “Plan”) is to
attract and retain persons who are expected to make important contributions to the Company and its
Affiliates, to provide an incentive for them to achieve the Company’s goals, and to enable them to
participate in the growth of the Company by granting Awards with respect to the Company’s Common
Stock. Certain capitalized terms used herein are defined in Section 7 below.



2.     Administration.




     The Plan shall be administered by the Committee; provided, that the Board may in any instance
perform any of the functions of the Committee hereunder. The Committee shall have authority to
recommend to the Board to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time consider advisable, and
to interpret the provisions hereof in its discretion. The Committee’s determinations with the
Boards approvals hereunder shall be final and binding. The Committee may, subject to applicable
law, delegate to one or more executive officers of the Company the power to make Awards to
Participants who are not Covered Employees and all determinations hereunder with respect thereto,
provided that the Committee shall fix the maximum number of shares that may be subject to such
Awards.



3.     Eligibility.




     All directors, executives and key employees of the Company or any Affiliate capable of
contributing to the successful performance of the Company are eligible to be Participants in the
Plan. Incentive Stock Options may be granted only to persons eligible to receive such Options under
the Code.



4.     Stock Available for Awards.




     (a) Amount. Subject to adjustment under subsection (c), up to an aggregate of 1,500,000 shares
of Common Stock, plus the shares subject to any Award that expires or is terminated unexercised or
is forfeited, to the extent of such expiration, termination, or forfeiture, may be issued pursuant
to Awards, including Incentive Stock Options, under the Plan. Shares issued under the Plan may
consist of authorized but unissued shares. Common Stock issued through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the shares available
for Awards under the Plan.



     (b) Limit on Individual Grants. The aggregate number of shares of Common Stock that may be
granted to any Participant in any fiscal year (i) subject to Options or Stock Appreciation Rights
or (ii) subject to other types of Awards with respect to which Performance Goals apply shall not
exceed 100,000 shares, subject to adjustment under subsection (c).



     (c) Adjustments. Upon any equity restructuring, whether a stock dividend, recapitalization,
split-up or combination of shares, or otherwise, the number of shares in respect of which Awards
may be made under the Plan, the number of shares subject to outstanding Awards, the exercise price
with respect to any of the foregoing, and the limit on individual grants in subsection (b) shall be
proportionately adjusted, provided that the number of shares subject to any Award shall always be a
whole number. In the event the Committee determines that any other reorganization,
recapitalization, merger, spin-off or other corporate transaction affects the Common Stock such
that an adjustment is required in order to preserve the benefits intended to be provided by the
Plan, the Committee shall equitably adjust any or all of the number and kind of shares in respect
of which Awards may be made under the Plan, the number and kind of shares subject to outstanding
Awards, the exercise price with respect to any of the foregoing, and the limit on individual grants
in subsection (b), provided that the number of shares subject to any Award shall always be a whole
number. Any adjustment made pursuant to this subsection shall be subject, in the case of Incentive
Stock Options, to any limitation required under the Code in the case of U.S. citizens or U.S.
resident aliens.



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5.     Awards under the Plan.




     (a) Types of Awards. The Committee may grant Options, Restricted Stock, Restricted Stock
Units, Stock Equivalents and Awards of shares of Common Stock that are not subject to restrictions
or forfeiture.



     (b) Terms and Conditions of Awards.




     (i) The Committee shall select the Participants to receive Awards and determine the terms
and conditions of each Award. Without limiting the foregoing but subject to the other
provisions of the Plan and applicable law, the Committee shall
determine (A) the number of shares of Common Stock subject to each Award or the manner in which such number shall be
determined, (B) the price, if any, a Participant shall pay to receive or exercise an Award or
the manner in which such price shall be determined, (C) the time or times when an Award may
vest or be exercised or settled, (D) any Performance Goals, restrictions or other conditions to
vesting, exercise, or settlement of an Award, (E) whether an Award may be settled in the form
of cash, Common Stock or other securities of the Company, Awards or other property, and the
manner of calculating the amount or value thereof, (F) the duration of any Restricted Period,
(G) the effect on an Award of the disability, death, retirement or other termination of service
of a Participant, and (H) the extent to which, and the period during which, the Participant or
the Participant’s legal representative, guardian or Designated Beneficiary may receive payment
of an Award or exercise rights thereunder.




     (ii) The Committee shall determine the form of consideration and manner of payment of the
exercise price of any Award. Without limiting the foregoing, the Committee may, subject to
applicable law, permit such payment to be made in whole or in part in
cash or by surrender of shares of Common Stock (which may be shares retained from the respective Award) valued at their
Fair Market Value on the date of surrender, or such other lawful consideration, including a
payment commitment of a financial or brokerage institution, as the Committee may determine. The
Company may accept, in lieu of actual delivery of stock certificates, an attestation by the
Participant in form acceptable to the Committee that he or she owns of record the shares to be
tendered free and clear of claims and other encumbrances.




     (iii) Any Award may be made alone, in addition to, or in relation to any other Award. The
terms of Awards of each type need not be identical, and the Committee need not treat
Participants uniformly. No Award shall be transferable except upon such terms and conditions
and to such extent as the Committee determines, provided that no Award shall be transferable
for value and Incentive Stock Options granted to U.S. citizens or U.S. resident aliens may be
transferable only to the extent permitted by the Code. No Award to any Participant subject to
United States income taxation shall provide for the deferral of compensation that does not
comply with Section 409A of the Code. The achievement or satisfaction of any Performance Goals,
restrictions or other conditions to vesting, exercise, or settlement of an Award shall be
determined by the Committee.



        (c) Provisions Applicable to Certain Types of Awards.




     (i) Options and Stock Appreciation Rights. The exercise price for any Option or Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock on
the Date of Grant or the par value of the Stock, whichever is greater. No Option or Stock
Appreciation Right shall have a term longer than ten years. No Incentive Stock Option may be
granted more than ten years after the effective date of the Plan. The Committee shall determine
the manner of calculating the excess in value of the shares of Common Stock over the exercise
price of a Stock Appreciation Right.




     (ii) Restricted Stock and Restricted Stock Units.




     (1) Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the Committee, during
the applicable Restricted Period. Restricted Stock Units may be settled in shares of
Common Stock or cash as determined by the Committee. The Company shall deliver
certificates with respect to shares of Restricted Stock and Restricted Stock Units that
are settled in shares to the Participant or, if the Participant has died, to the
Participant’s Designated Beneficiary at the expiration of the Restricted Period.



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     (2) Notwithstanding clauses (D) or (E) of Section 5(b)(i) or Section 6(i),




     a. forfeiture restrictions on shares of Restricted Stock and Restricted Stock
Units that lapse solely based on the length of the Participant’s service shall lapse
with respect to no more than one-third of such shares per year; and




     b. forfeiture restrictions on shares of Restricted Stock and Restricted Stock
Units that lapse based on the achievement of Performance Goals shall lapse based on a
performance period of at least one year;




provided that the foregoing limitations shall not apply to (i) lapses of restrictions in
connection with the disability, death, retirement or other termination of service of the
Participant or in accordance with Section 6(e) or (ii) other Awards, including
modifications of Awards, with respect to an aggregate number of shares not exceeding five
percent of the total number of shares authorized for issuance under the Plan.



6.     General Provisions.




     (a) Documentation. Each Award under the Plan shall be evidenced by documentation in the form
prescribed by the Committee and delivered to or executed and delivered by the Participant
specifying the terms and conditions of the Award and containing such other terms and conditions not
inconsistent with the provisions hereof as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable law and accounting principles. Any
such documentation may be maintained solely in electronic format.



     (b) Termination and Forfeiture. The terms of any Award may include such continuing provisions
for termination of the Award and/or retransfer to the Company of any shares, cash or other property
previously issued pursuant thereto relating to competition or other activity or circumstances
detrimental to the Company as the Committee may determine to be in the Company’s best interests.



     (c) Dividends. In the discretion of the Committee, any Award may provide the Participant with
dividends or dividend equivalents payable (in cash, in shares of Common Stock, or in the form of
Awards under the Plan) currently or deferred and with or without interest.



     (d) Committee Discretion. Except as otherwise provided hereby or in a particular Award, any
determination or action with respect to an Award may be made or taken by the Committee at the time
of grant or at any time thereafter.



     (e) Change in Control. In order to preserve a Participant’s rights under an Award in the event
of a change in control of the Company (as defined by the Committee), the Committee in its
discretion may, at the time an Award is made or at any time thereafter, take such actions,
including without limitation one or more of the following: (i) providing for the acceleration of
any time period relating to the vesting, exercise, or settlement of the Award, (ii) providing for
payment to the Participant of cash or other property with a Fair Market Value equal to the amount
that would have been received upon the vesting, exercise, or settlement of the Award in connection
with the change in control, (iii) adjusting the terms of the Award in a manner determined by the
Committee to reflect the change in control, (iv) causing the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) terminating the Award, as the Committee may
consider equitable to Participants and in the best interests of the Company.



     (f) Tax Withholding. A Participant shall pay to the Company, or make provision satisfactory to
the Committee for payment of, any taxes required by law to be withheld in respect of Awards under
the Plan no later than the date of the event creating the tax liability. The Company and its
Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of
any kind due to the Participant under the Plan or otherwise. In the Committee’s discretion, the
minimum tax obligations required by law to be withheld in respect of Awards may be paid in whole or
in part by repurchase of shares of Common Stock, including shares retained from the Award creating
the tax obligation, valued at their Fair Market Value on the date of retention or delivery.



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     (g) Legal Compliance. The Company shall not be required to issue any shares of Common Stock or
take any other action pursuant to the Plan unless the Company is satisfied that all requirements of
law, or of any stock exchange on which the Common
Stock is then listed, in connection therewith have been or will be complied with, and the
Committee may impose any restrictions on the rights of Participants hereunder as it shall deem
necessary or advisable to comply with any such requirements.



     (h) Foreign Nationals. Awards may be made to Participants who are employed outside, or are not
citizens or resident aliens of, the United States or the Cayman Islands on such terms and
conditions different from those specified herein as the Committee considers necessary or advisable
to achieve the purposes of the Plan or to comply with applicable laws.



     (i) Amendment of Awards. The Committee may amend, modify or terminate any outstanding Award,
including without limitation changing the dates of vesting, exercise or settlement, causing the
Award to be assumed by another entity, and converting an Incentive Stock Option to a Nonstatutory
Stock Option, provided that the Participant’s consent to such action shall be required unless the
terms of the Award permit such action, the Committee determines that such action is required by
law, or the Committee determines that the action, taking into account any related action, would not
materially and adversely affect the Participant. The foregoing notwithstanding, without further
approval of the stockholders of the Company, the Committee shall not authorize the amendment of any
outstanding Option or Stock Appreciation Right to reduce the exercise price and no Option or Stock
Appreciation Right shall be canceled and replaced with an Award exercisable for Common Stock at a
lower exercise price.



7.     Certain Definitions.




     “Affiliate” means any business entity in which the Company owns directly or indirectly 50% or
more of the total voting power or has a significant financial interest as determined by the
Committee.



     “Award” means any award of shares of Common Stock or right with respect to shares described in
Section 5(a).



     “Board” means the Board of Directors of the Company.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor
law.



     “Committee” means one or more committees appointed by the Board to administer the Plan or a
specified portion thereof. Each such committee shall be comprised of not less than two members of
the Board who shall meet such criteria as the Board may specify from time to time.



     “Common Stock” means the Class A common stock, CI$0.50 (approx. US$0.60) par value, of the
Company.



     “Company” means Consolidated Water Co. Ltd., a Cayman Islands corporation.



     “Covered Employee” means a “covered employee” within the meaning of Section 162(m) of the
Code.



     “Date of Grant” means the date on which all requirements under applicable law and the
Company’s Memorandum and Articles of Association for the effective grant of an Award have been
satisfied.



     “Designated Beneficiary” means the beneficiary designated by a Participant, in a manner
determined by the Committee, to receive amounts due or exercise rights of the Participant in the
event of the Participant’s death. In the absence of an effective designation by a Participant,
“Designated Beneficiary” means the Participant’s legal representative.



     “Fair Market Value” with respect to the Common Stock or other property means the fair market
value thereof determined by such methods as shall be established by the Committee from time to
time. Unless otherwise determined by the Committee in good faith, the per share Fair Market Value
of the Common Stock as of any date shall mean (i) if the Common Stock is then listed or admitted to
trading on a national securities exchange, the last reported sale price on such date on the
principal national securities exchange on which the Common Stock is then listed or admitted to
trading or, if no such reported sale takes place on such date, the average of the closing bid and
asked prices on such exchange on such date or (ii) if the Common Stock is then traded in the
over-the-counter market, the average of the closing bid and asked prices on such date, as reported
by The Wall Street Journal or other appropriate publication selected by the Committee, for the
over-the-counter market.



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     “Incentive Stock Option” means an Option complying with the requirements of Section 422 of the
Code or any successor provision and any regulations thereunder.



     “Option” means a right to purchase shares of Common Stock and may be an Incentive Stock Option
if specified by the Committee.



     “Participant” means a person selected by the Committee to receive an Award under the Plan.



     “Performance Goals” means one or more objective performance goals based on one or more of the
following criteria established by the Committee: revenue; revenue growth; sales; expenses; margins;
net income; earnings or earnings per share; cash flow; shareholder return; return on investment;
return on invested capital, assets, or equity; profit before or after tax; operating profit; return
on research and development investment; market capitalization; quality improvements; market share;
cycle time reductions; customer satisfaction measures; strategic positioning or marketing programs;
business/information systems improvements; expense management; infrastructure support programs;
human resource programs; customer programs; technology development programs; or any combination of
any of the foregoing, and may be particular to a Participant or may be based, in whole or in part,
on the performance of the division, department, line of business, subsidiary, or other business
unit, whether or not legally constituted, in which the Participant works or on the performance of
the Company generally.



     “Restricted Period” means any period during which an Award of shares not yet issued or any
part thereof may be forfeited to the Company or during which shares issued pursuant to an Award may
be required to be retransferred to the Company in stated circumstances.



     “Restricted Stock” means shares of Common Stock that are subject to a contractual obligation
to retransfer to the Company in stated circumstances.



     “Restricted Stock Unit” means the right, subject to forfeiture, to receive the value of a
share of Common Stock in the future, payable in the form of cash, Common Stock or other securities
of the Company, Awards or other property, and is an unfunded and unsecured obligation of the
Company.



     “Stock Appreciation Right” means the right to receive any excess in value of shares of Common
Stock over the exercise price of such right.



     “Stock Equivalent” means the right to receive payment from the Company based in whole or in
part on the value of the Common Stock, payable in the form of cash, Common Stock or other
securities of the Company, Awards or other property, and may include without limitation phantom
stock, performance units, and Stock Appreciation Rights.



     “Transferable for value” means a transfer on terms that would prevent the Company from relying
on Securities and Exchange Commission Form S-8 (or any successor form) with respect to the issuance
of the Common Stock underlying the respective Award.



8.     Miscellaneous.




     (a) No Rights with Respect to Service. No person shall have any claim or right hereunder to be
granted an Award. Neither the adoption, maintenance, or operation of the Plan nor any Award
hereunder shall confer upon any person any right with respect to the continuance of his or her
employment by or other service with the Company or any Affiliate nor shall they interfere with the
rights of the Company or any Affiliate to terminate or otherwise change the terms of such service
at any time, including, without limitation, the right to promote, demote or otherwise re-assign any
person from one position to another within the Company or any Affiliate. Unless the Committee
otherwise provides in any case, the service of a Participant with an Affiliate shall be deemed to
terminate for purposes of the Plan when such Affiliate ceases to be an Affiliate of the Company.



     (b) No Rights as Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be issued under the Plan until he or she becomes the holder thereof.



     (c) Effective Date. The effective date of the Plan, from time to time, shall be the most
recent date that the Plan was adopted or that it was approved by the stockholders, if earlier (as
such terms are used in the regulations under Section 422 of the Code).



     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, subject to such stockholder approval as the Board determines to be necessary
or advisable to comply with any tax or regulatory requirement.



     (e) Governing Law. This Plan shall be construed in accordance with and governed by the laws
of the Cayman Islands, without regard to principles of conflicts of law.



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